Mervyn King, the former head of the Bank of England, is visiting. The economics and finance faculty spent some time with him yesterday, courtesy of Kim Schoenholtz’s Center. Tom Cooley threatened to “grill him,” but in the end we had an interesting and congenial exchange of ideas about the state of economics after the crisis. Some of the highlights (my recollection, not exact quotes):
- We’re shifting to a new equilibrium that monetary policy neither can nor should prevent.
- We need other policies to raise income, in particular supply side policies: tax reform, education, international agreements on intellectual property, and so on.
- A flexible exchange rate was crucial to the UK’s recovery.
Lots of food for thought, and also for teaching. We look forward to grilling him further, perhaps at his upcoming talk.